India Parliament Off to a Stormy Start

By

Romit Guha

Updated Nov. 22, 2012 5:40 a.m. ET

NEW DELHI--The Indian parliament's winter session got off to an expectedly chaotic and noisy start Thursday, with opposition lawmakers shouting slogans against the government's recent decision to ease foreign direct investment rules in the retail sector.

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Apart from retail FDI -- which the opposition says will drive out mom and pop stores -- the lawmakers were protesting against a range of other issues, including the capping of subsidized cooking gas cylinders to six per household, high inflation and law and order problems.

The unruly start to the session came despite an appeal by Prime Minister

But the members chose to ignore the appeal, as they have done for much of the past two sessions.

In the previous two sessions, the protests were centered around corruption allegations against some members of the government, which New Delhi denies.

The current session -- which will last till Dec. 20 -- was expected to be stormy as well because many political parties oppose the government's recent reform measures on multi-brand retail, which could see the likes of

In the middle of September, India's government took several reform measures, raising the state-set price of diesel by as much as 14% and capped the number of subsidized cooking gas cylinders to six per household in a year in an effort to narrow its fiscal deficit.

A day later, it revived a plan to let foreign companies own up to 51% of multi-brand -- or supermarket -- operations. It said also that it would let overseas airlines hold up to 49% in Indian carriers, the first time such investments have been allowed.

It also increased the foreign-investment cap for cable and satellite TV operators to 74% from 49%.

The government says the reforms are crucial to efforts to rein in its widening budget gap, attract capital to finance the high current account gap, and boost economic growth, which is at its slowest in a decade.

Amid the din Thursday, Speaker Meira Kumar disallowed a no-confidence motion against the government by the Trinamool Congress on the retail FDI issue, saying that it didn't have adequate support.

The Trinamool Congress -- headed by firebrand leader and West Bengal Chief Minister Mamata Banerjee -- was a member of the ruling federal coalition, but it walked out recently over the retail FDI and cooking gas issues.

The main opposition Bharatiya Janata Party didn't support the motion -- which would have likely forced federal elections before the scheduled 2014 polls -- but it took on the government on the same issues.

Senior BJP leader Sushma Swaraj accused the government of "insulting parliament," saying that the Congress Party-led United Progressive Alliance government had broken a promise to work on a consensus before allowing FDI in retail.

Venkaiah Naidu, another senior member of the BJP, sought a clarification from the government, and "then a debate on the policy, and a vote."

Federal Commerce Minister Anand Sharma rejected the BJP's accusations, saying that wide consultations were held before going through with the measures.

But he added that allowing FDI in retail was an "executive decision" which didn't need parliament's approval.

While any vote on a resolution on FDI in retail wouldn't endanger the government's survival, it has the potential to embarrass it, showing that it lacks backing in the legislature.

While the Congress has been beset with corruption allegations, the BJP is struggling with leadership issues. The Samajwadi Party opposes FDI in retail, but it supports the government in parliament. The Bahujan Samaj Party doesn't have a clear stance, but it backs the government, too.

Sanjay Kumar, a political analyst with the Center for Study of Developing Societies, said that "there is a sign of desperation among all parties. No one has a clear agenda, a clear policy, and hence are clutching to any issue to get noticed by the people and the media."

"Someone will have to blink, otherwise we will go the way of the previous sessions when hardly any business was conducted," Mr. Kumar added.

Prime Minister Singh, in his appeal, said the Congress Party is ready to "discuss all issues on the floor of both houses of parliament."

He invited senior leaders of the BJP to dinner Thursday to find a way to get the house functioning as this session has a "heavy legislative agenda."

As many as 25 legislative proposals -- including key bills to liberalise the insurance and pension sectors -- are slated to be placed before parliament in this session.

The insurance bill will aim to raise the foreign direct investment limit in the sector to 49% from 26%, while the pension bill will seek to allow foreign investments of up to 49% in local pension fund managers.

The other key proposals which will be put up during the session include a move to amend banking regulations. This includes increasing the voting rights of large shareholders in private banks to 26% from 10%, and giving the central bank more powers.

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